WORLD EQUITIES TUMBLE ON GLOBAL GROWTH, BREXIT FEARS; NIFTY SET TO ACHIEVE 8074 TARGET
US indices fell 0.7%-1.3% on Friday, on concerns over global growth and U.K. vote on whether to leave the European Union.
“BREXIT” fears increased after a latest poll showed the "leave" camp rose to 55% of respondents, versus 45% who favored staying in the European Union. That marked the largest portion of respondents who favored exiting since research firm ORB began polling the issue for it last year.
The German 10-year bund yield hit a fresh all-time low of 0.011% Friday, down sharply from Monday's levels of around 0.070%. The Japanese 10-year yield hit a record negative low of minus 0.13%. The U.S. 10-year Treasury yield hit 1.627%, its lowest since Feb. 11. The 2-year yield was near 0.73%, its lowest since May 12.
US oill tumbled $1.49 or 3% to $49.07 a barrel. The weekly oil rig count edged higher for a second-straight week, according to Baker Hughes data.
In economic data, US preliminary read on consumer sentiment for June came in at 94.3, a touch lower than May's final read of 94.7.
Dollar index rose more than half a percent.
European markets plunged 1.9%-3.6%.
For the week, Dow rose 0.3% while S & P 500 and Nasdaq fell 0.2% and 1% respectively. In Europe FTSE lost 1.5% while DAX and CAC tumbled 2.7% and 2.6% respectively. In Asia Shanghai and Nikkei lost 0.4% and 0.25% respectively while Hang Seng added half a percent.
After rising nearly three fourth of a percent in first two hours, benchmark indices nosedived more than a percent from the top of the day to end lower by about half a percent, extending the losing streak to second consecutive day. Sensex settled at 26636, down 128 points while Nifty lost 34 points to finish at 8170. BSE mid-cap and small-cap indices lost 0.4% and 0.2% respectively. BSE Realty and Auto indices tumbled 1% each, becoming top losers among the sectoral indices while Power and Utilities indices gained the most, up 0.6% and 0.3% respectively.
FIIs net bought stocks and index futures worth Rs 201 cr and 323 cr respectively but net sold stock futures worth Rs 505 cr. DIIs were net sellers to the tune of Rs 166 cr.
Rupee depreciated 5 paise to end at 66.76/$.
India's index of industrial production shrank 0.8% in April, compared with a growth of 0.3% in the previous month, driven by a 3.1% contraction in manufacturing activity.
Today morning Asian markets are trading with cuts of 1% to 3% with Nikkei leading the losses and SGX Nifty is suggesting about 75 points lower start for our market.
For past couple of sessions, we have been mentioning that 8190 is the immediate support, a sustained trading below which will generate a sell on the hourly chart and would pave the way for further correction. We had also mentioned on Friday that 8074, the 50% retracement level of the recent 7716-8295 upmove, would be the immediate downside target if that happens, followed by 8005, which is the 50% retracement level.
The benchmark broke 8190 support decisively on Friday by closing at 8170 and is set to open with a big down gap today, vindicating our view.
As mentioned above, 8074 continues to be immediate target to eye below which 8005 would be the next support to eye.
Immediate resistance on the hourly chart is placed around 8230, with the stop loss of which trading shorts can be held on to.